Plan to cut child benefit 'fair'

Plan to cut child benefit 'fair'

Chancellor George Osborne says his plans for changes to child benefit are 'fair'

Chancellor George Osborne says his plans for changes to child benefit are 'fair'

First published in National News © by

Chancellor George Osborne has insisted that it is "fair" to ask high-income families to share the burden of cutting Britain's debt by removing their child benefit.

The Chancellor was challenged in the Commons by his Labour shadow Ed Balls, who said the plan would create a situation where a two-income family earning £84,000 will receive the benefit while a single-earner family on £43,000 will not.

The exchange came as speculation raged over whether Mr Osborne will use his Budget to water down the child benefit plan or to reduce the 50p income tax rate on earnings over £150,000.

Business Secretary Vince Cable said there was an "understanding" within Government that if the 50p rate was scrapped, it would be replaced with a levy on wealth, such as the mansion tax favoured by Liberal Democrats.

But Labour leader Ed Miliband said that, while the Government should look at proposals for a tax on valuable homes, scrapping the 50p rate would be "absolutely the wrong thing to do".

Mr Osborne declined to reveal details of his Budget in his final appearance at Treasury questions in the Commons before the March 21 statement, telling MPs only that there would be no "unfunded giveaways".

Challenged over his plan - announced in 2010 - to remove child benefit from those earning over £42,745 a year from January 2013, Mr Osborne responded: "I think it is fair to ask those in the top 15% of the income distribution to make a contribution to the fiscal consolidation."

But the shadow chancellor told him that he could not "do the right thing" on child benefit because his economic policies had failed to deliver the growth he had been hoping for.

"The Chancellor's policy on child benefit seems to be that a two-earner family on £84,000 can keep all their child benefit, but a one earner family on £43,000 - whether a single-parent or where mum or dad stays home to look after the kids - will lose all their benefit," said Mr Balls. "What's fair about that?"

Deputy Prime Minister Nick Clegg fuelled speculation that the child benefit cut-off could be raised to £50,000 or more, by admitting that the current plan created "anomalies" because it applies if one parent enters the 40% tax band, regardless of what the total household income is.

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